Cases where contracts that increased the valuation of corporations before listing were terminated immediately after listing have continued to occur. This situation arises when corporations fail to sufficiently verify their management and business risks during the listing process, resulting in losses that fall squarely on investors.
However, it has been found that if such issues occur prior to listing and the corporation's intent is not confirmed, there are no appropriate sanctions available. This issue is particularly prominent among bio corporations that went public through technical exceptions. Orum Therapeutics and IntoCell, which were listed on the KOSDAQ market in February and May this year, respectively, are representative examples.
◇ Does not take responsibility for pre-listing issues?… Only investor losses due to regulatory gaps
IntoCell, which entered the KOSDAQ market in May, saw its stock price soar to 52,400 won, three times the public offering price (17,000 won) after listing. IntoCell, a company developing an antibody-drug conjugate (ADC) platform, announced last October that it had signed a technology transfer agreement for the ADC platform "Nexatecan" with ABL Bio, a dual-antibody specialist, garnering significant interest from investors prior to listing.
However, on the 9th, the company abruptly announced that the technology transfer agreement was canceled. This was because it was revealed late that a Chinese company had already filed a patent with a structure similar to the technology platform.
Immediately after the related disclosure was made, the stock price plummeted. On the 30th, IntoCell's stock price closed at 26,900 won, which is half of its peak. The company stated that it confirmed the Chinese company's patent application belatedly after listing, but investors are expressing outrage at the fact that the company did not properly grasp even the global patents for its core technology.
The problem is that important contracts were terminated due to the company's poor market research, resulting in investor losses, but there are no means to sanction such actions.
Under the current system, even if a corporation passes preliminary inspection right up until listing, if important issues arise in management, it falls under grounds for "non-acknowledgment of effect" and the approval for listing can be revoked. INNOGRID, which failed to disclose a dispute involving its largest shareholder last year, had its listing canceled under this regulation.
However, once a company is listed, this regulation cannot be applied. It is possible to designate it for substantive review of listing qualifications and consider delisting, but this only applies if it is found that important matters were falsely reported or omitted in the documents submitted at the time of listing to protect investors. There must be confirmation that the company concealed such facts.
According to the exchange, whether a company intentionally omitted important information is determined by court precedents. If, based on various circumstances, it is judged that the company could reasonably have been aware, it is deemed intentional.
IntoCell explained, "The contract was signed within 18 months after the patent of the Chinese company was filed under non-disclosure guarantees, so it was impossible to confirm the patent application at the time." In such cases, it is very likely that the exchange will not recognize the company's intent.
Disclosure obligations arise the moment a company becomes a listed entity, making it impossible to sanction for non-compliance with disclosure. IntoCell explained in its disclosure announcing the contract termination, "We are a newly listed entity as of May 23, 2025, and this contract was signed on October 23, 2024, before disclosure obligations arose."
Orum Therapeutics, which went public in February, is a similar case. The stock price fell after it halted the clinical trials for its core pipeline drugs just two months after listing. As of the 30th, the stock price plunged by 48% from its peak.
Some investors speculate that the company may have been aware of issues in clinical trials prior to listing but postponed the decision to halt the trials until after the listing, though Orum Therapeutics has not faced any sanctions from the exchange. Both IntoCell and Orum Therapeutics are corporations that entered the KOSDAQ through technical exceptions.
In response, an official from Orum Therapeutics stated, "We have made efforts to transparently inform investors of clinical issues that arose during the listing process, and we have continued to work to resolve uncertainties through ongoing communication."
◇ "Even without intent, must take responsibility for a period… Need for system improvement
Experts point out that for a certain period after listing, regardless of intent or falsehood, there should be discussions on requiring new listings and securities firms to take responsibility for any mistakes related to issues that arose prior to listing. This would facilitate more diligent and transparent information provision during the preliminary review process and ultimately protect investors.
Additionally, there are voices calling for refinement of evaluation standards for key technologies by industry, such as patents, during the review process. However, some opinions suggest that immediately discussing delisting for new listings could obstruct the recovery of losses for companies and investors in need of funding, necessitating alternative measures such as public disclosure penalties.
According to the exchange, "Given that the key technologies and business structures by industry vary widely, it is difficult to standardize common preliminary review criteria," and they stated their intention to apply review criteria more meticulously, considering recent cases.
The exchange plans to discuss the introduction of related systems and the application of penalties as well. An official from the exchange noted, "We sympathize with some of these concerns, and we will carefully consider how to address victim relief, whether through penalties or other sanctions, taking into account multiple aspects such as corporations and investors."